A newly inked agreement to resolve the cross border trucking issue between the U.S. and Mexico will immediately remove half of the retaliatory duties Mexico has applied to $2.4 billion worth of U.S. exports, including multiple fresh produce commodities.
Government and industry leaders praised the long-anticipated agreement. U.S. and Mexican officials said in January they were committed to resolving the dispute.
“This is good news and it should help sales,” said Mark Powers, vice president of the Northwest Horticultural Council, Yakima, Wash.
“Today’s agreement between the United States and Mexico means the fresh produce industry will no longer be caught in the middle of a dispute that created an economic barrier to trade for our farmers,” Tom Nassif, president of Irvine, Calif.-based Western Growers said in a statement. “We look forward to its full implementation later this summer.”
Mexico is the largest export market for U.S. apples and Nancy Foster, president of the Vienna, Va.-based U.S. Apple Association, said the immediate reduction in tariffs from 20% to 10% should boost apple exports.
“The stars are aligned for a robust start to harvest with this occurring,” Foster said.
When the retaliatory tariffs were first implemented, grapes sent to Mexico faced a 45% tariff. That dropped to 20% in August. In 2009, according to the California Table Grape Commission, exports to Mexico dropped almost 73%, to a value of $16 million.
“Mexico has been a vital market for California’s fresh grape industry and it was important to get this issue resolved as soon as possible,” said Kathleen Nave, president of the commission, in a news release. “This was a complex trade issue and California’s fresh grape industry was hurt as a result.”
Mexico first enacted the tariffs in spring of 2009, not long after the U.S. ended a pilot program that had allowed Mexican truck drivers to operate in the U.S. The trucking dispute dates back to the 1994 North American Free Trade Agreement, which promised cross-border access when the deal was approved. Delays tied to environmental concerns and union opposition eventually led Mexico to seek retaliatory tariffs on U.S. goods and was authorized to do so by a NAFTA dispute settlement panel.
To ratchet up pressure on the U.S., Mexico in August imposed a 20% tariff on apples, apricots, cherries, grapefruit, grapes, pears, strawberries, oranges, onions and sweet corn. Those tariff levels will be cut in half by July 8, Agriculture Secretary Tom Vilsack said.
Vilsack said the remaining 50% will be lifted within five business days from the date on which the first Mexican carrier receives authorization under the new program, which he said could occur as soon as 45 days.
Vilsack said the dispute has cost the U.S. more than $2 billion, with U.S. exports of affected commodities declining by 27%.
He said officials at the Department of Transportation will administer the cross-border trucking on a phased-in basis with high safety standards in place for Mexican trucks.